Client Number: 004672.1 Clients Preferred Name: Ken Client Meeting: 17 July 2021 The 3-year US contract that Ken signed included a clause stating that: If your employment is terminated, you are not to work for any other company in the industry, other than this company for a period of one year. In agreeing to this clause, Ken was paid an additional one-off lump-sum of AU$65,000 on top of his annual wage.

PART B Advise Ken as to the Australian tax treatment of the money received from his US role by answering the following question set. Ensure you refer to relevant legislation, case law and tax rulings in your analysis. No calculations are required.

What is the source of Kens income from his employment with the US company/employer? (3 marks)

Determine whether the one-off lump-sum will be treated as income or capital. (3 marks)